Last year new lending criteria came into effect for ‘portfolio landlords’, impacting those with four or more mortgaged Buy to Let properties. Mortgage companies now need to undertake a full analysis of the landlords entire property portfolio as part of the lending process – from cash flow, to landlord’s experience, to liabilities, to assets from other income sources – and it could mean that the application process will take much longer.
The extra number crunching could also lead to increases in the costs of borrowing, as lenders may start to charge an administration fee to cover the costs of the complicated and lengthy application process.
Now, when it comes to applying for a new mortgage / remortgage, the total borrowing across the whole portfolio must be no more than 75% of its value.
If you are a landlord that is highly leveraged and you had counted on being able to release equity to fund capital improvements or repairs, you’re probably going to need to rethink your strategy.
The key for landlords is being prepared. Our advice is to have all your paperwork in order and discuss your options with your broker as early as possible. This paperwork is likely to include a property spreadsheet detailing addresses, values, rental income and mortgage arrangements, and the last couple of years’ tax returns, as well as details of any other assets and liabilities.